The One Thing Trump Is Right About: China Is Winning

By Bryan Birsic, CEO of Wunder Capital.

While the US military and diplomatic machine remains deployed as if the world will forever be fueled by hydrocarbons, we are quietly ceding the energy might of the 21st century to China.

Chinese leadership has waged a sustained, well funded, and focused effort to win the war of renewables dominance — a war for perhaps the largest economic and strategic prize of this new century. In the US, we don’t even know we’re in a battle. However, our single and sustaining national superpower — innovation — has made the US the ground floor for renewables through these young technologies’ histories (check out the history of solar and wind.) Solar and wind power came out of our national labs and universities, and most breakthroughs continue to happen on our shores. Unless we wish to hand over our position of power, we need to harness our inherent advantages and national might to build the advanced energy manufacturing industry of the future in the US.

Why Energy Matters

It is worth asking why energy matters. Why has more than 40 years of US foreign policy been organized around regular and cheap access to energy resources? And how does that calculus change when the only inputs you need are sunshine and wind? Perhaps most importantly, what is the most strategic part of the energy production chain to own in that future?

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Source: Our Finite World | Gail Tverberg

So, first, why does energy matter? Yes, energy is 8% of worldwide GDP. Yes, it’s critical to the daily survival of billions of people. But, mainly, energy matters because it’s a large input into very strategic industries. As a surprisingly robust rule of thumb, the more awesome and futuristic something is, the more energy it uses. Cars use some energy, planes use more, rockets use an enormous amount. Watches use some energy, iPhones use more, supercomputers use an enormous amount. The technology-rich future we see is one that is vastly more energy consumptive than the present.

And so, a major strategic advantage in attracting the brightest minds at the best companies in the most interesting industries will increasingly be regular, cheap access to a lot of power. Conversely, expensive or inconsistent access to the latest energy technologies will hamper any economy’s ability to compete for the industries of the future.

Second, and shockingly under-discussed, is how the power structure of the global energy market changes when the dominant energy technologies have widely and freely available inputs, namely wind and sunshine. The power in a hydrocarbon-based energy economy lies mainly with those who have access to the underlying resources. Recalling that this energy power structure has dominated US foreign policy for nearly a half century, solar and wind completely upend this way of thinking. In a world powered by wind and sunshine, the primary impact is that enormous volatility and long-tail risk is pulled out of the system (see 1973 oil crisis) by removing input availability as a risk. The secondary impact is that those who create and own the production capacity for these free-input technologies are the new masters of the global energy market. This is the war that China is winning, and we don’t know we’re in .

What We Can Do

Let’s level set this question of what the US can and ought to do, with what China has been up to:

In short, China has identified this market as vitally strategic, and deployed all available resources against it. China’s moves in renewables are a case study in one advantage of a command-control economy: investing heavily ahead of profitability to lock in a strategic, long-term opportunity. What can the US do against this sustained public-private effort from China? First, note that despite our relative paucity of focus on and support for this market, we find ourselves in 2017 in a fighting position. Again, this is due largely to the massive technological innovation lead we still maintain. However, our current course will leave us playing catch-up over the next decade if we don’t deploy renewables at scale. Particularly in the context of, at best, milquetoast support from the Executive Branch, we need to identify clear and actionable goals to keep the US competitive in the fight for the 21st century energy market.

When building a renewables manufacturing industry, it all starts with keeping as many renewable energy engineers, technicians, students, and scientists in this country as possible. That is the cornerstone of our national advantage. The immediate and clear implications are in immigration policy: including renewables in the strategic skill sets and industries that receive special treatment, and/or creating a special program for renewables. For immigration policy to matter, we also need to make sure the US is the best place to start a renewables company in the world, involving everything from the ease of moving breakthroughs from lab to market, to broadening existing DOE grants for innovation, to implementing R&D incentives for renewable energy companies as Canada does.

Most importantly, we need to price carbon in the energy market. It’s Economics 101: carbon creates a cost for society, that cost isn’t captured in the price of hydrocarbons, to reach the efficient amount of hydrocarbons you must account for that cost. We must build upon our new Secretary of State’s and Presidential Advisor Musk’s support for a carbon tax and create a political and economic coalition to properly price our energy options, including all costs.

These actions, taken together, will move the US strategic and economic focus from the energy industry of the 20th century to the 21st’s, and provide our kids (and the Elon Musks of their day) with the US energy industry they need and deserve.


About the Author: Bryan Birsic, Cofounder and CEO of Wunder Capital brings extensive finance and capital raising expertise to Wunder, from private equity investing at Bain & Company to financing online commercial lending companies at Village Ventures. Notably, Bryan’s firm led early investments into commercial lending market leader OnDeck Capital. Along with his finance background, Bryan has built and led several companies that bring software approaches to new markets, most notably and recently SimpleReach, where Bryan was President and which has raised more than $15mm. Bryan attended Williams College, and moved with his family to Boulder from New York City several years ago.

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